Savings and incentives

Numerous public policies seek to encourage private saving. These include the tax-favoured treatment of certain savings vehicles (including private pensions and the various types of ISA), as well as other policies more directly aimed at effecting behavioural change (such as automatic enrolment into employer-provided pensions, financial education programmes and matched saving schemes). Our research in this area aims to investigate the responsiveness of individual saving behaviour to financial and other incentives. This includes the evaluation of government policies designed specifically to influence private saving behaviour, such as the Saving Gateway and automatic enrolment.

In this report we describe the forms in which household wealth is held, we set out the effects of the current UK tax system on the incentive to save in different assets, we consider the implications of a number of reforms due to be introduced or currently under consideration, and we analyse the effect of two non-tax features – employer matching of pension contributions and fund charges – on the attractiveness of investing in different assets.